Ride-Hailing Networks with Strategic Drivers: The Impact of Platform Control Capabilities on Performance.

The article investigates the impact of two operational platform controls—demand-side admission control and supply-side repositioning control—on the performance of ride-hailing networks with self-interested drivers facing persistent spatial demand imbalances. Using a novel game-theoretic fluid model of a two-location network, it characterizes steady-state equilibria under three regimes: Centralized Control (full admission and repositioning control), Minimal Control (no admission control and decentralized repositioning), and Admission Control (centralized admission control with decentralized repositioning). Key findings include that decentralized repositioning leads to inefficiencies due to excessive idling at low-demand locations, while admission control can strategically reject demand at low-demand locations to incentivize driver repositioning to high-demand areas, improving overall platform revenue. The study provides necessary and sufficient conditions for such strategic demand rejection, derives upper bounds on the gains from platform controls for both the platform and drivers, and demonstrates the robustness of results through multilocation network examples. It concludes that operational controls significantly affect network efficiency and driver incentives, highlighting a trade-off between platform revenue maximization and driver participation under strategic demand rejection.